Strategies to grow and protect your retirement fund.
It doesn’t take much to derail your personal finances—especially in today’s economy. We turned to Darby Affeldt, DVM, a financial advisor and associate partner with North Star Resource Group, for key strategies to keep your financial house in order and your retirement goals on track.
Define financial goals. What is your objective? “This is big,” says Affeldt. “We must sit down and understand where we are going and what we want to achieve.” Everyone has a different objective, from when you want to retire to how much money you want to have, she notes.
Start planning early. Affeldt advises clients to start planning right out of vet school. “I see people burying their heads in the sand because they don’t want to deal with it. But there’s no reason to wait,” she says. Don’t let years go by and then think, “I wish I had done something.”
Recognize the complexities. “Financial planning is as vast and as complex as vet med,” she says. “When I first got into this, I thought it was easy. I was wrong. You can do it yourself, but chances are that there will be gaps or you’re missing opportunities.” Also, make sure you’re using a fiduciary. “It’s really important,” says Affeldt. “There are people at the home office who look over a fiduciary’s recommendations and make sure they are suitable.”
Prioritize insurance. It’s really important to get yourselves insured. “I see buy/sell agreements that are unfunded,” says Affeldt. “What if someone dies or becomes disabled? What are you going to do? How are you going to pay off their estate or keep the practice running alone?” She recommends finding a financial advisor who is product-neutral. “Insurances are products. Investments are products,” says Affeldt. “Work with someone 100% product-neutral.”
Provide financial resources to your team. “This is an area where you can make a really big difference,” says Affeldt. “Don’t just do a benefits package. Put in a retirement plan, put in a match—and have an advisor come in regularly and tell your team how cool you are that you care about their future selves.” An advisor can also provide interpretation of the stock market and its impact on retirement plans.
Have a partnership agreement. “I see a lot of practices that lack a buy/sell agreement,” says Affeldt. “Or they put one in but don’t fund it with life insurance or a disability buyout insurance.” Be prepared for the worst, she advises: “If your partner got hit by a car on the way home and couldn’t walk, how long is that going to be feasible for you to do all of the work and send out half of the profits?”
Revisit and review your retirement plan. Don’t rely on the value of the practice to fund your retirement income. “Put in a 401(k) plan. And save a large amount of money in there,” advises Affeldt. Younger investors might consider an aggressive-growth target fund based on what year you plan to retire, but don’t invest all your money in the fund, she says. “Everyone’s financial plan should be as unique as their own DNA. Build a relationship with an advisor and find out what it takes to map out your own date-specific, dollar-specific goals.”
Diversity assets. Simple IRAs, for example, are small—“like a bicycle with training wheels,” explains Affeldt. “The most you can contribute in 2022 is $14,000/year if you’re under 50, or $17,000 if you’re over 50.” Good planning includes tax diversification as well. “We need to diversify holdings and tax-defer some ‘buckets,’ perhaps not all,” she notes.
The bottom line, says Affeldt, is to find a financial advisor, create a formal financial plan and give your team the resources to do this too. “Pay a professional financial advisor to make sure you’re on track to your goals—now, and into retirement,” she says.
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Contact Dr. Affeldt at (206) 321-6566 or Darby.Affeldt@northstarfinancial.com.